SWITZERLAND – A Swiss pension fund has tendered five briefs, worth a total in the region of half a billion euros via IPE-Quest.
The fund has tendered some CHF100m (€62m) Swiss passive equity, €100m pan-Europe passive equity, a JPY5.4bn Japan passive equity, a US passive equity worth more than $100m and a CHF400m Swiss passive debt, giving a total of about €543m.
For the CHF100m Swiss passive equity, the €100m pan-Europe passive equity, the JPY5.4bn Japan passive equity and the $100m-plus US passive equity the fund prefers experience with Swiss pension funds.
The fund has no preference regarding replication techniques, although it expects managers to invest using a “structured and clearly defined process”. The fund accepts any form of investment but requires a track record of at least five years.
Preferred benchmarks are the SPI/SMI or MSCI Switzerland for the CHF100m Swiss passive equity, the MSCI Europe (including UK) for the €100m pan-Europe passive equity briefs.
For the JPY5.4bn Japan passive equity the preferred benchmarks are MSCI Japan and Topix while the S&P 500 and MSCI USA are preferred for the $100m US passive equity.
Candidates can suggest different indices “as far as the reason is convincing”, the fund said.
For the CHF400m Swiss passive debt minimising tracking error and tracking difference, the benchmark will be the SBI TR cut in three buckets within the same mandate. The pension fund will manage duration by allocating to the three buckets.
The fund pointed out that certain restrictions might apply regarding the Swiss BVV2 pension fund regulations and the investment guidelines of the pension fund.
Any form of investment is possible as long as the chosen structure provides “clear advantages” for a Swiss pension fund. The fund requires a tracking error objective (TE) of between 0% and 0.5% p.a.
The tracking difference objective (TD) should be greater than -0.3% over a three-year rolling period.
A track record of a minimum of five years as well as some experience with Swiss pension funds is advantageous. For this mandate, the fund also prefers a local presence in Switzerland.